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Woolies first half results

Woolworths have released their results for the first half this morning. This is the first half that includes David Jones from 1 August 2014, there are however no comparable figures. So we have to look at the group as a whole, which integrates David Jones, it does not have a comparable period however. This makes this period of adjustment hard for those who love comparisons and patterns to appear and then to measure that against your expectations. Here goes, for the 26 weeks to end December the 28th 2014. Revenue grew to 30.3 billion Rand (excluding David Jones, an increase of 12.5 percent), pre tax profits were 2.9 billion Rand. Clothing sales in South Africa grew 9.4 percent, add merchandise and that is lower at 8 percent with profits in this division growing only 2.7 percent. Children clothing, footwear and accessories having a rough time of it.

The big contributor here locally was the food division, sales up 14.1 percent and operating profits increasing by a whopping 24.3 percent. Wow. The supermarket strategy is working well, customers have been receptive to the new format. I must say that as a user, the supermarkets are certainly a cut above the rest of the competition, the prices are too! David Jones, which is again recent and is going to take a fair amount of time to "get right" recorded sales growth of 2 percent. Country Road delivered sparkling results, up 9.2 percent, a lot of that in Rand terms juiced up. Australian sales growth was better than here locally.

Diluted HEPS for the six months clocked 192.4 cents per share, the dividend (interim) declared was 96.5 cents. Remember that there are 928 million shares in issue, dividend cover at the half year stage is 1.9 times as it was last year. At the full year stage it was 1.4 times, remembering now however that there is a small matter of the debt outstanding, raised to pay for the David Jones transaction. The rights issue itself cost 399 million Rand, good work if you can get it, right?

It is not all roses and champagne, to use a valentines analogy, load shedding and the prospect of higher taxes is going to impact their core market no doubt. Woolies have suggested that they are trading comfortably ahead of the market and the first six weeks of the second half of the year has been positive. I am never quite sure what that means, better is always good. Down Under, ahead of the beginning of the World Cup, both their major businesses David Jones and Country Road continue to trade ahead of the rest of the market. Talking the market, the equities market is really pleased with this result, the share price is up around four percent mid morning here in Jozi. Good work, we continue to favour Woolies as the best entry into what is now Southern Hemisphere retail.


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